Construction in UK declined in May 2016

Construction in UK declined in May 2016 by 2.1% MoM. The decline almost entirely erased increase in April 2016, which was 2.8%. The construction, which generates 6% gross domestic product (GDP) of the country, will have to record an increase of 1.9% in June, not to weigh on economic growth. Such developments, however, is unlikely given already published private studies showing that the sector is shrinking in June. The economists expected the decline to amount of 1% in May.

The result of the referendum in the UK on June 23, triggered fears of a recession and led to great uncertainty about future trade relations between the United Kingdom and other countries.

On an annual basis, the construction sector declined by 1.9% amid forecasts for decrease of 3.5%. In the first quarter economic growth in the UK slowed to 0.4% on a quarterly basis.

The activity in UK construction sector has slowed to 7-year low. The Purchase Managers’ Index (PMI) fell from 51.2 points in May to 46 points in June, which is the lowest level since 2009. Any value above 50 talks about expansion in the sector, while below 50 points each for shrinking. In housing was deported a decline of 3.2% in May from the beginning of the year the index recorded an increase only in February.